BERLIN, Feb 5 (Reuters) - Investor morale in the euro zone deteriorated in February, a survey showed on Monday, linking the drop to discontent with coalition negotiations between German Chancellor Angela Merkel’s conservatives and the centre-left Social Democrats (SPD).

The conservatives and the SPD are expected to agree on a four-year government programme this week. The SPD’s 443,000 members will vote on any final deal in a postal ballot.

“Negotiations on forming another grand coalition aren’t going down well with investors,” Sentix said, adding that the survey was like “a vote of no confidence in a grand coalition”.

Sentix’s index for the euro zone slipped to 31.9 in February from 32.9 in January. That missed the Reuters consensus forecast for a reading of 33.0 and came after a rise last month.

An index tracking Germany fell to 36.2 from 40.1 last month. Expectations in Germany dropped to 5.5 from 11.8, hitting their lowest level since July 2016.

Sentix said the policies agreed so far between the conservatives and the SPD “leave investors with a very bad aftertaste”.

Compromises needed to make any government programme acceptable to both parties have spawned watered-down policies that deprive Germany of reforms that investors and economists see as necessary for future growth.

German business leaders had wanted a comprehensive reform of the tax system to make companies more competitive, especially after the United States slashed corporate taxes under a taxation overhaul.

The conservatives and the SPD have agreed tax relief of 10 billion euros for citizens and want to introduce tax incentives for companies investing in digitalisation. Both measures fall short of the tax overhaul demanded by companies.

Sentix said the 989 investors it surveyed continued to view the economic situation in the rest of the world as robust.

Expectations in the euro zone dropped to their weakest level in a year in February but perceptions of the current conditions picked up to their highest level since August 2007 as recovery in the euro zone continued. (Reporting by Michelle Martin; Editing by Joseph Nasr)